FX.co ★ Nvidia Stock Down On Weak Q4 Margin View, Despite Upbeat Q3

Nvidia Corp.'s shares fell by approximately 3% during after-hours trading on Wednesday, following a cautionary statement from the AI chipmaker regarding an expected decline in gross margins for the fourth quarter. Nonetheless, the company anticipates a substantial increase in revenues compared to the previous year, driven by surging demand for AI technology.

In the third quarter, Nvidia, currently the world's most valuable company by market capitalization, reported a significant increase in profits, surpassing Wall Street's expectations, alongside robust revenue growth. Sequentially, net profit rose by 16%, while revenues grew by 17%.

"Artificial intelligence has gained full momentum, driving a transformative shift towards NVIDIA computing globally," stated Jensen Huang, Nvidia's founder and CEO. "The demand for our Hopper processors and anticipation for the upcoming Blackwell products are remarkable as foundational model developers expand their pretraining, post-training, and inference processes. AI is revolutionizing every sector, company, and nation. Enterprises are integrating agentic AI to redefine workflows, while investments in industrial robotics are soaring with advancements in physical AI. Nations have recognized the critical need to develop their own AI infrastructure."

Forecasting into the fourth quarter, Nvidia expects reported and adjusted gross margins to be 73.0% and 73.5%, respectively, with a margin of plus or minus 50 basis points. Last year's figures showed a reported gross margin of 76% and an adjusted margin of 76.7%.

The company projects that revenue for the quarter will reach $37.50 billion, plus or minus 2%, compared to $22.10 billion for the same period last year. Thomson Reuters data suggests analysts are forecasting $37.61 billion in revenue for the quarter, with such estimates generally excluding special items.

Furthermore, Nvidia announced it will issue its next quarterly cash dividend of $0.01 per share on December 27, payable to shareholders recorded as of December 5.

In the third quarter, Nvidia's net income soared by 109% to $19.31 billion, from $9.243 billion the previous year. Earnings per share increased by 111% to $0.78 from $0.37 a year earlier.

The adjusted net income was reported at $20.01 billion, or $0.81 per share, compared to $10.02 billion, or $0.40 per share, from the prior year. Analysts had anticipated earnings of $0.75 per share.

Quarter gross margin improved to 74.6%, compared to last year's 74.0%.

Quarterly revenue surged by 93.6% to $35.082 billion, from $18.120 billion last year. Data Center revenue rose by 112% to $30.8 billion, Gaming revenue increased by 15% to $3.3 billion, Professional Visualization revenue saw a 17% increase, and Automotive and Robotics revenue surged by 72% year-over-year.

On the Nasdaq, Nvidia's stock closed regular trading on Wednesday at $145.89, down 0.76%. In after-hours trading, shares fell further by 2.5% to $142.25.